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Case Details
- National ID: Regional Court, Riga, Judgement CA-1192-21/29 (C33466619)
- Member State: Latvia
- Common Name:N/A
- Decision type: Court decision in appeal
- Decision date: 22/06/2021
- Court: Rīgas apgabaltiesa
- Subject:
- Plaintiff:
- Defendant:
- Keywords: consumer rights, unfair terms, validity of the unfair contract term

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Directive Articles

Unfair Contract Terms Directive, Article 6, 1.
Headnote

ECLI:LV:RAT:2021:0622.C33466619.9.S

If a contract contains a penalty clause which is an unfair contract term, this clause shall not be applied.
Facts

The contract for residential tenancy was concluded between a limited liability company and the consumer. The consumer unilaterally withdrew from the contract by failing to observe the term envisaged in the contract itself for exploitation of such a right. The lessor kept the security deposit and brought a claim to the court by claiming, inter alia, the penalty envisaged by the contract. The consumer brought a counterclaim by challenging the validity of the contractual provisions envisaging loss of the security deposit and the contractual penalty and claiming re-payment of the security deposit. The first instance court refused both the claim and the counterclaim. The court established that the contract could contain a clause envisaging that the lessor keeps the security deposit as the consumer unilaterally withdrew from the contract contrary to the contract. As regards the penalty clause, the court established that this clause contains an unfair contract term and should not be applied. However, due to the fact the contract had already expired, and the claim is dismissed, there are no grounds to establish that this contractual provision is invalid. The first instance court judgement was appealed by both parties in those parts in which the claim and counterclaim accordingly were dismissed.
Legal issue

Is the unfair contract term not only non-binding but also invalid?
Decision

The appeal instance court joined the reasoning provided by the first instance court in its judgement. The appeal instance court, however, indicated additional reasons including the issue of the validity of the unfair contract term. The appeal instance court established that the first instance court had validly concluded that the unfair contract term cannot be applied but there are no grounds to establish it as invalid much the same as a contractual provision providing for the security deposit.

URL: https://manas.tiesas.lv/eTiesasMvc/nolemumi/pdf/455395.pdf

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Result

The court dismissed both appeals and the claim with the counterclaim. The judgement was not appealed to the Supreme Court and entered into force after the expiry of the term for its appeal.

Case law

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